IndiGo is aggressively expanding on foreign routes. Pity it is not going per plan

IndiGo, India’s largest carrier by fleet and domestic market share, went on a global expansion spree last year. The airline launched an unprecedented 16 international destinations in last two years, taking the total to 23 international stations. This renewed focus on international on the back of a combination of growing outbound travel, lack of expansion by other Indian carriers and hitting slot constraints on domestic sector.

As of November 2019, the last month for which the regulator DGCA has declared the traffic data, the airline saw 10 percent of its departures and passenger numbers to be on the international routes. However, in terms of ASK (Available Seat Kilometres) 24.2 percent of its capacity is deployed on International routes. That’s nearly one-fourth of the capacity.

The running has not been smooth for the airline, for a combination of reasons including those which are beyond the airline's control.

IndiGo had to pull out flights from the Kolkata – Hong Kong sector within months of launch as Hong Kong was in turmoil due to protests. The airline continues to operate its daily departure from Bengaluru. From a point where getting a slot at Hong Kong is a challenge to airlines pulling out or scaling back, the political situation in Hong Kong has led to rapid decline in business and traffic and IndiGo was impacted by the same, like most others.

Last year, IndiGo launched flights to China — currently battling the Coronavirus outbreak. While the airline does not fly to Wuhan — the epicentre of the outbreak — it flies to Chengdu and Guangzhou. With the epidemic not yet in control, there is bound to be an impact on travel to China, irrespective of the destination as was the case with the SARS outbreak in 2003.

Airlines were impacted widely back then and it could be the same this time around. The airline recently announced addition of flights to Chengdu from Mumbai and a call centre in Guangzhou. Its China strategy and growth could be impacted if the virus outbreak is not contained.

The airline also operates to Malaysia — with a daily flight each from Delhi, Bengaluru and Chennai. Malaysia and India do not have the best of relations currently after the nonagenarian Malaysian prime minister spoke against India at various forums and the Indian government has imposed restrictions on import of refined palm oil from Malaysia. The airline had started with double daily services to Kuala Lumpur from Chennai, however currently it operates once a day.

IndiGo’s first codeshare came up with Turkish Airlines, and IndiGo started with two flights a day to Istanbul from New Delhi. Unfortunately, it coincided with the closure of Pakistani airspace for flights into and out of India, following the Balakot strike by the Indian Air Force. IndiGo was forced to suspend one of the two flights even before it started and opt for a technical halt for the flight which was in operation. While the airspace opened up and flights resumed, the airline made news for leaving behind the baggage of all passengers and when that seemed like resolved, the Indian government issued advisory for tourists visiting Turkey!

International operations is a game which goes beyond the usual capacity — competition combines and involves bilateral rights, airlines which operate in India to feed their global network and geopolitics.

According to Anna.aero, IndiGo is the second largest airline by seat capacity at Doha with the first being home carrier Qatar Airways with which the airline has a limited codeshare. In June 2017 began the Qatar blockade which saw Qatar Airways being banned from overflying and flying to certain neighbouring countries, and airlines from those countries stopping flights to Qatar meant that airlines like Emirates, Etihad, Saudia and Gulf Air—which offered connectivity to Doha from India via their hubs at Dubai, Abu Dhabi, Riyadh, Jeddah and Manama—were not in a position to do so. This opened up opportunities for every Indian carrier with bilateral rights still available for Indian side.

After the suspension of Jet Airways, Air India group and IndiGo remain the only operators to Doha from India and with its scale and codeshare with Qatar Airways, IndiGo certainly seems to have benefitted due to a lack of competition from the Middle Eastern operators.

IndiGo recently crossed the mark of 250 aircraft in its fleet—a first for any airline in India. The airline placed another mammoth order last year, which includes the A321XLR—capable of flying longer ranges and giving the airline the ability to fly non-stop to Europe, Africa and more.

Route planning is not a game of darts, unlike what it is often made out to be. It involves intense research, number crunching and analysis but the airline seems to have landed into one or the other headwind in its quest for international expansion.

While Jet Airways was in operation, the airline used to declare its revenue share from domestic and international and at some point in time, the international revenue had crossed the 50 percent mark. While IndiGo does not declare such a split, it looks unlikely that the airline will reach that number anytime soon and without wide body operations. Thus, the hit due to factors beyond its control may not be a big one, the fact remains that most of its gateways that the airline launched over the last two years have seen headwinds—something it rarely faced on the domestic front.